Oil Pushes Higher, but Doubts Grow about Output Cut Deal

Oil Pushes Higher, but Doubts Grow about Output Cut Deal

Trump's tweet came after OPEC producers and their allies agreed on Sunday to cut production by 9.7 million barrels per day, which some analysts feared would not be enough to stem the damage from the combination of plunging demand amid the coronavirus pandemic and a price war between Russian Federation and Saudi Arabia.

He had said oil demand was expected to contract by 6.8 million bpd in 2020 as opposed to a forecast at Opec's meeting in early March of an increase of 100,000 bpd.

Asia's main ex-Japan stocks gauge is up 18 percent from a four-year low struck around mid-March following unprecedented global stimulus.

Top global oil producers are considering slashing output by 20 million barrels a day under the terms of a deal to boost prices, US President Donald Trump said on Monday. Alejandro Barbajosa, vice president of crude for Argus Media, a price reporting agency for the energy industry joins us from Tokyo to discuss the latest updates.

The agreement also brings to an end a price war that had been raging between Russian Federation and Saudi Arabia, after the latter pulled out of a previous agreement last month and ramped up production.

"I am honoured to be a party of this historic moment and historic agreement", Saudi's Prince Abdulaziz bin Salman told Reuters. Both are now set to cut production in efforts to protect the market, with Saudi Arabia alone set to cut production to 8.5 million barrels a day - the country's lowest since 2011. The group met on Sunday to hammer out a deal.

Canada and Norway signalled a willingness to cut. Brent crude futures settled at US$31.48 a barrel on Thursday, while United States crude futures were last at US$22.76 a barrel. Meanwhile, Russia and Saudi Arabia will reduce output by 2.5 million barrels per day each.

Under the terms of the deal, the U.S., Brazil and Canada will cut production by nearly 4 million barrels per day.

"We're going to see a significant drop in production anyway from producers who can't make money producing", said Phil Flynn, an analyst at Price Futures group.

Trump cheered the agreement Sunday, calling it a "great deal for all" and saying it would "save hundreds of thousands of energy jobs in the United States". Governments have ordered residents to stay home to curb the spread, roiling markets and disrupting daily life.

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